Brait shareholders are being asked to invest a further R2.5bn, with the goal of reducing the amount of debt held by its investment company, Virgin Active. The hope is that this improves the chance of a successful listing of Virgin Active in late 2027.

Virgin Active is the largest investment remaining in the Brait portfolio, after years of pruning and refinancing. Since their other major asset (Premier Group) is listed, the uncertainty regarding the valuation of Virgin Active probably explains much of the ~30% discount between the Brait share price and the value that management says the group’s portfolio is worth… Which makes Virgin Active a key variable in any investor’s evaluation of Brait. 

Within the Virgin Active group, South Africa is by far the largest contributor to group earnings. Of the four main regions that Virgin Active operates in (running what their results pack calls ‘social wellness clubs’), South Africa accounts for two thirds of the group’s 1m members and a little over half of the group’s profits, but only a third of revenue. 

This breakdown implies that South Africans, on average, pay much less per year to be a member of a Virgin Active club than members in Italy, Australia and the UK. 

If South Africa is so important, and since fees vary so widely across regions, maybe we should compare the fees paid by Virgin Active members to fees paid by members at Planet Fitness, Viva Gym, Gym Company and a very long tail of independent social wellness clubs gyms… That would be valuable for Brait investors, right?

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